The man who led South Korea’s motor industry growth through the last decade says Hyundai and Kia Motors expect what will be their lowest annual sales growth since 2003 as the weak yen fires up Japanese rivals.

In his annual new year speech to staff, group chairman Chung Mong-koo (75) said sales at Hyundai and its smaller affiliate Kia would likely grow by just 4 per cent in 2014. Global competition was about to get tougher in an industry facing an uncertain future, he warned.

The Korean duo exports about two-thirds of its cars from South Korea, a much higher proportion than Japanese peers, making them more vulnerable to currency fluctuations. A weaker yen gives Japanese car-makers like Toyota, Honda and Nissan leeway to offer customers better deals in key export markets like the US – the same advantage that helped Hyundai and Kia after the global financial crisis of 2008.

“Competition among companies is intensifying, as the global economy has entered an era of low growth,” Mr Chung said in his traditional new year address to some 1,000 employees at Hyundai’s Seoul headquarters. “Technological convergence leads to change in the industry and adds to uncertainty.”

The won hit its highest level for more than five years yesterday against both the dollar and the yen, prompting talk in Seoul of possible government intervention in currency markets to help exporters. Shares in Hyundai and Kia, ranked fifth in the world by combined global sales, ended down 5.1 per cent and 6.1 per cent, respectively.

The yen’s fall has been stoked by Japan’s attempts to support its export industries and pull its economy out of a two-decade slump. A senior official in South Korea earlier this week expressed concerns that the country’s own exporters could be hurt as a result – motor exports typically account for close to 9 per cent of South Korea’s total.– (Reuters)